Govt sees strong growth ahead in industries

The Jakarta Post, Jakarta

Betting on a return of investment, the government is forecasting that the country's industrial production capacity will grow by an average 8.1 percent per year in the next four years.

The projection, based on research by the Ministry of Trade and Industry, is far greater than the industrial growth posted in the past three years, which averaged less than 4 percent, which the ministry has blamed on a scarcity of investment.

"If materialized, it could significantly reduce unemployment, which this year stands at 11.6 million," head of the ministry's research and development body Agus Tjahajana said as quoted by Antara on Tuesday when unveiling the National Industrial Development Policy -- a concept set out by the ministry to be officially launched prior to the end of the current administration's term.

He added, however, that the research was not final, as it first had to be discussed with relevant ministries or state agencies overseeing respective sectors.

As a comparison, national industry (excluding the oil and gas sector) recorded an average growth of 3.95 percent, 3.68 percent and 3.38 percent in 2001, 2002 and 2003, respectively.

This, analysts said, contributed to the nation's modest economic growth of 3 percent to 4 percent during that period. Investment has been in the doldrums for several years, with foreign investors complaining about, among other things, legal uncertainty, lack of security and rampant red-tape.

But boosted by the projected trouble-free elections, Agus predicted a return of investment -- both domestic and offshore -- starting in the third quarter of the year as confidence in the country improved.

In 2005 for instance, he added, many sectors would likely record rapid growth such as food and beverage production, which is likely to expand by 6.5 percent, while growth in the textile industry could reach 6 percent.

Other sectors expected to experience growth include wood and other forest products at 8.5 percent, paper and printed materials at 9.5 percent, fertilizer and chemical products at 11.2 percent, cement and non-metal mining products at 9.2 percent, iron and steel at 6 percent, machinery and other heavy equipment at 11.2 percent.

In another part of the report, Agus cited a lack of skilled workers as the main challenge to industrial development.

"So far, our manpower is dominated by those with a low-level of skills. At present, workers who did not finish elementary school make up 77.7 percent of our manpower structure."